Question

Discuss the significance that the concept of the relevant range has to break-even analysis.

Answer 1

It is cost accounting concepts called relevant range, in theory it means going beyod to a specific range will earn profits and going down to certain level will incur in loss. It is a span of activity over which certain cost behiavour hold true and example to a certain level fixed cost will remain fixed will not change to a certain Relevant range.

Its a part of breakeven analysis in any of the business, the concept is at a given amount of relevant sales the Revenue will be equal to Variable and fixed cost i.e. company is able to cover all the expenses incured to genrate that sales,if a company go beyond the level of sales then it will earn profits .